Breaking News: Bono and Matt Yglesias Mugged by Economic Reality

If these two can learn the benefits of markets and capitalism, anyone can.

U2’s Bono Admits: “A Humbling Thing Was to Learn the Role of Commerce” in Development

The Irish singer and co-founder of ONE, a campaigning group that fights poverty and disease in Africa, said it had been “a humbling thing for me” to realize the importance of capitalism and entrepreneurialism in philanthropy, particularly as someone who “got into this as a righteous anger activist with all the cliches.”

“Job creators and innovators are just the key, and aid is just a bridge,” he told an audience of 200 leading technology entrepreneurs and investors at the F.ounders tech conference in Dublin. “We see it as startup money, investment in new countries. A humbling thing was to learn the role of commerce.”

Matt Yglesias – The Case for Price Gouging:

The basic imperative to allocate goods efficiently doesn’t vanish in a storm or other crisis. If anything, it becomes more important. And price controls in an emergency have the same results as they do any other time:  They lead to shortages and overconsumption. Letting merchants raise prices if they think customers will be willing to pay more isn’t a concession to greed. Rather, it creates much-needed incentives for people to think harder about what they really need and appropriately rewards vendors who manage their inventories well.

Not only did Yglesias get it right, he got it right at exactly the same time that Republican Chris Christie was getting it wrong.

Upon declaring a state of emergency today, Governor Chris Christie issued a forceful reminder to merchants: Price gouging during a state of emergency is illegal; will be investigated by the Attorney General and Division of Consumer Affairs; and will result in significant penalties.

“During emergencies, New Jerseyans should look out for each other – not seek to take advantage of each other,” said Governor Christie. “The State Division of Consumer Affairs will look closely at any and all complaints about alleged price gouging. Anyone found to have violated the law will face significant penalties.”

New Jersey’s price gouging statute, N.J.S.A. 56:8-107, et. seq., makes it illegal to set excessive price increases during a declared state of emergency or for 30 days after the termination of the state of emergency.

Say a company wants to get supplies to people afflicted by Sandy. Their trucks can’t just zip in and out due to downed trees and blocked roads. So their truck might have to sit in line for days. Lost trucking time costs money. They could potentially make up that loss by charging more for the goods, but in New Jersey they’d be charged with price gouging. So they have no incentive – and potentially a negative incentive because of the truck sitting idle for days – to get supplies into the disaster area.

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